Have you ever thought about starting your own business, but you didn’t have the financial support? Nowadays, things are a bit easier compared to some years ago since you can ask for a business loan, which will help you establish a business. You should also have the correct information about the business loan interest rate since it’s an important part of this process. In Singapore, for example, there are different loans you can choose from, such as an SME loan, a standard one, or a start-up loan. Let’s begin this article with a presentation about a standard loan.
When and Why Should You Choose a Standard Loan
For a little context, you might want to know what a loan is. A loan is a form of debt, a type of credit where the person who asked for it receives an amount of money in exchange for a future refund. The borrower must agree to some terms, which is why you need to have updated information about the interest rate since it is a contract you will sign. Moreover, there is a wide variety of business loans, so you can always choose what you think might work for you and, more importantly, for your business.
Now that you have a clear image of this term let’s talk about the standard loan. You can also find this type of loan under the name of a term loan, which is a monetary loan that is refunded over a certain period of time, short-term or long-term, agreed by both sides. This is a way of helping organizations to grow in a short period of time.
A standard loan is suitable for different businesses, offering a helping hand in order to buy the necessary equipment. No matter if your organization is small, medium, or large, the purpose of this loan is to aid you in your journey of expanding your business. Usually, what makes this loan more appealing is the low interest rate that comes with it, which can start from 2.22%.
Useful Information About the Business Loan Interest Rate
Apart from choosing the type of loan that suits you, you also need to have all the details regarding how the business loan interest rate is being set. There are two ways in which you can obtain a loan; the first one is a government-assisted loan, and the second one is a non-government-assisted, like a commercial one.
Firstly, government-assisted loans allow organizations to access finances easier with the help of the Monetary Authority of Singapore and different organizations. Moreover, this program offers a big advantage regarding loans. The advantage is that Enterprise Singapore will take on a risk share. Nevertheless, you should verify whether you are eligible when applying for this type of loan. Plus, the risk share can be higher if you meet the following requirements: you have an enterprise opened within the past five years with no less than one employee and more than 50% share capital owned by individuals.
Secondly, the non-government-assisted loans usually have different purposes. Typically, these loans are short-term and allow you to borrow and pay the interest only when you need to. As a result, the interest rate is generally higher. Plus, depending on the loan type you decide upon, there will always be different rates; it also depends on the company.
A Proper Presentation to Singapore SME Loan
Those who have businesses in this country can apply for a Singapore SME loan. This is specially created for small and medium-sized organizations that need help with purchasing equipment, or it can also be used for enterprise expansion. Furthermore, as presented earlier, this type of loan can also be found under programs with easy access, where the government will share the risk.
An important reason for this move from the government’s side, along with several financial institutions, is to support enterprises in continuing to evolve in the future market. This leads us to the newly updated budget for 2024. Starting from 1st April 2024, Enterprise Singapore decided to raise the loan quantum to $500,000 in order to provide support. Furthermore, they made sure that they covered a wide variety of industries to address different financing needs.
Start-up Loan and How to Be Eligible
A start-up loan is designed for those who are at the beginning and need capital support. Starting a business can be hard without any financial support, especially when you have a solid plan but don’t exactly know where to start. This is where a start-up loan comes in handy; the capital can be used in many ways, like buying the necessary equipment or covering different operations needed on a daily basis.
In addition, if you are living in Singapore and have a business, you might want to know how to be eligible for a loan. It is mandatory to be a citizen of this country and to be more than 21 years old. As for documents, you need to have proof of identity, income, and residency. Furthermore, you might also need an employment contract, and sometimes, there are cases when lenders require you to have a guarantor. It’s not something very common, but you should be prepared for this if the business doesn’t have a valid economic history.
Building on the previous point, another thing that might be taken into consideration when asking for a loan is your business plan. It is crucial to do market research since you have to show a good marketing understanding and that you own a good strategy.
Conclusion
A business loan will help you when you want to start a business or scale your current one and need financial support. It is useful to have knowledge about the business loan interest rate, especially about the SME loan, and choose what is best for you and your organization. Always verify the eligibility when applying for a loan, and don’t forget to have a solid plan.
